What is Business Intelligence?

Business intelligence (BI) is an umbrella term used to encompass the processes, methods, measurements and systems businesses use to more easily view, analyze and understand information relevant to the history, current performance or future projections for a business.  Other terms that people often use to describe BI include business analytics, decision support and executive decision support. The goal of BI is to help decision-makers make more informed and better decisions to guide the business. Business intelligence software and software-as-a-service (SaaS) solutions accomplish this by making it simpler to aggregate, see, and slice-and-dice the data. In turn, this makes it easier to identify trends and issues, uncover new insights, and fine-tune operations to meet business goals. BI solutions can be very comprehensive, or they can focus on specific functions, such as corporate performance management, spend analysis, sales pipeline analysis and sales compensation analysis.

Why Should You Care?

Results from the SMB Group’s recently released survey, 2010 SMB Routes to Market Study reveal that SMBs view “getting better insights out of the data they already have” as their top technology challenge. BI solutions can solve this problem by providing a framework and tools to measure and manage business goals and conduct “what-if” scenarios to evaluate different courses of action.

As a result, more people have to be part of the data collection and analysis process, and different people in the organization (sales, marketing, finance, etc.) need to look at data in different ways. Typical problems with the spreadsheet approach include:

• Time consuming and labor intensive to set up and maintain. Establishing a company-wide model, creating organizational plans, distributing and collecting information from different managers, consolidating multiple spreadsheets, and debugging broken macros and formulas becomes unwieldy.
• Insufficient collaboration and feedback capabilities. Desktop spreadsheets are siloed, and don’t enable real-time data sharing and updating. Getting a unified, accurate view becomes difficult.
• Error prone. Research shows that 20 to 40 percent of all spreadsheets contain errors, and as they become more complex, error rates multiply. Without an audit trail, changes and mistakes can go undetected and businesses make decisions based on bad information.
• Inadequate analysis and reporting. Collecting information and cobbling it together via spreadsheets is cumbersome. The detailed information that decision-makers need can be hard to get or not even available.

Business intelligence solutions give businesses a way to streamline and unify the data collection, analysis and reporting process. BI solutions are built on a unified database, so everyone involved in the process gets a single, real-time view of the data. Many BI solutions feature self-service dashboards and reporting tools that make it easier and less time consuming to contribute to and manage the process.

What to Consider

Until recently, BI solutions have typically been too expensive and complicated for many SMBs to use and manage. But more recently, vendors have made strides to make BI solutions more tailored, accessible and affordable. For example:

• Function-specific BI solutions. Many vendors have introduced software designed to focus on the analytical needs specific to a particular department or process. By focusing on a specific need, they can offer solutions that are simpler to use and more cost-effective. For example, vendors such as Adaptive Planning and Host Analytics focus exclusively on corporate performance management; Cloud9 Analytics concentrates on helping companies manage salesperformance; Xactly focuses on sales compensation analytics; and Rosslyn Analyticsaddresses spend management and analysis.
• Pre-packaged solutions within a broader BI suite. Companies that offer broad, comprehensive suites that include BI, data warehousing and analytics capabilities have been re-packaging their solutions to focus on specific needs. For instance, SAP Business Objects Edgeoffers modules for planning and consolidation and for strategy management and score carding; and Birst offers pre-packaged solutions for sales, marketing and financials.
• ERP and CRM companies providing pre-integrated BI solutions. Many ERP and CRM vendors now offer pre-integration with BI solutions to reduce the time, difficulty and expense of deploying BI to work with an existing system. Examples include NetSuite, which partners withAdaptive Planning and MyDials and Salesforce.com with Xactly for sales compensation management.
• On demand, software-as-a-service (SaaS) BI solutions. The SaaS model removes IT infrastructure costs from the BI equation, and it can dramatically reduce or eliminate upfrontcapital costs. Many of the vendors mentioned above — and others — deliver their BI solutions via a SaaS model.

Today, there are more BI choices geared for SMB needs and budgets than ever. However, vendors characterize and target the SMB market differently, and these differences are reflected in pricing, solution capabilities and complexity. Start with a thorough assessment of our internal needs, and then carefully investigate and evaluate how different offerings map to your organizational requirements and constraints. Many vendors provide access to free trials, pilots, demonstrations, etc. to help you get a better idea of whether a specific solution will fit your needs. By taking more time upfront to assess, evaluate and compare your alternatives, you’ll greatly increase the odds of selecting a solution that will meet, but not exceed your needs and budget.

]]> http://www.smb-gr.com/smb-education/what-is-business-intelligence-and-why-should-you-care/feed/ 0 http://www.smb-gr.com/blogs-sanjeev-aggarwal/dell%e2%80%99s-expands-its-infrastructure-solutions-and-services-portfolio-with-new-security-solutions-for-midsize-companies/ http://www.smb-gr.com/blogs-sanjeev-aggarwal/dell%e2%80%99s-expands-its-infrastructure-solutions-and-services-portfolio-with-new-security-solutions-for-midsize-companies/#comments Tue, 03 Aug 2010 01:21:54 +0000 admin http://sanjeevaggarwal.wordpress.com/?p=667 Over the past couple of years, Dell has been building a very significant set of IT solutions and services portfolio geared to providing small (which Dell defines as companies with 1 to 100 employees) and midsize companies (defined by Dell as businesses with 100 to 500 employees) , but more appropriately, “S” as companies without dedicated IT staff and “MB” as companies with dedicated IT generalists, with the capabilities they need to more effectively and productively manage their growing IT infrastructure investments. Dell’s focus on this area is underscored by its recently announced (July 28, 2010) midsize security initiatives and partnerships with Juniper Networks and SecureWorks.

Security continues to be one of the top technology challenges faced by SMB and midsize businesses. In the SMB Group’s “2010 SMB Routes To Market” study, medium business survey respondents indicated that “implementing new solutions and upgrades needed to keep IT systems up and running” is one their top 5 technology challenges. In addition, although spending on infrastructure services and solutions have lagged behind other areas during the economic slowdown of the past two years, a sizable percentage of midsize companies across different employee size bands plan to purchase infrastructure solutions and services in the next 12 months, as shown in Figure 1.

Figure 1: Technology Solutions Purchase Plans for Medium Businesses

Often lacking the internal expertise and resources required to address internal and external infrastructure management requirements, SMBs and midsize companies are turning to third-parties for help. In particular, the changing and volatile nature of security threats–along with the potentially high damage fallout should a breach occur–is a serious challenge and threat for these companies, who are unlikely to have the capabilities to provide proactive, 24/7 monitoring and problem resolution.
Dell’s security strategy is to provide end-to-end solutions and services, integrating best-of-breed security products and service from both Dell and its partners. While many point solutions are available in the market today, Dell’s more comprehensive and helps customers identify threats, monitor and manage security risks, and comply with industry or government regulations. This approach can give businesses peace of mind, and allow them to focus on their core business, instead of worrying about IT vulnerabilites.

The Dell Security Solution portfolio includes:

• Network Security Appliance. The J-SRX Gateway is a Dell-branded network security appliance that Dell co-developed with Juniper. The J-SRX integrates firewall, VPN, Intrusion prevention, anti-spam, anti-virus and web filtering technologies to secure the network with one system, which can replace legacy Firewall/VPN/IPS devices and outdated software. Dell had been offering the J-SRX appliance to larger customers since October of 2009, but is now extending them to bring network-level security to medium businesses. The base J-SRX Services Gateway starts at $645.
  
• Endpoint Client Security Solutions. Dell acquired KACE, which provides management and deployment appliances, in February of this year. The Dell KACE K1000 management appliance helps secure endpoint devices through services such as patching, and helps IT managers to plan, execute and report on security compliance efforts in a mixed environment of Windows and Mac devices. The K1000 includes the recently announced Dell KACE Secure Browser (see my colleague Laurie McCabe’s recent post), which uses application virtualization to isolate activities in the Firefox browser to reduce Internet security risks.
  
• Security Services. Dell has partnered with SecureWorks to provide a portfolio of security services. Functioning as an extension of a midsize company’s internal IT staff, SecureWorks provides daily security monitoring and management services to services to identify, prevent and remediate threats. These services can help businesses better assess their current level of security, meet regulatory compliance requirements, and reduce IT costs. The services will be available by the end of the year.
  

   

Implications for SMBs and Midsize Enterprises.

Dell is already a market leader in medium business for IT Infrastructure solutions, including servers, desktops and storage, according to IDC and Gartner. Furthermore, Dell has been providing Dell Managed Services — one of the industry’s most comprehensive managed IT services offerings to support heterogeneous IT environments for these customers–since 2009.

By augmenting Dell Managed Services first with the KACE acquisition, and now with these new security solutions and services in conjunction with Juniper and SecureWorks, Dell continues to expand its infrastructure portfolio for SMBs and midsize companies–underscoring its commitment to this space over the long haul.

Dell’s approach gives SMBs and midsize companies that want infrastructure solutions and services a one-stop shop for both on-premise and remote managed services, which should appeal to those companies that want a more streamlined solution approach, are looking to consolidate vendors and contracts, and want one throat to choke. However, Dell needs to present this larger vision and story to the SMB and midsize companies and educate them on the benefits of this approach; otherwise they will have a difficult time displacing the current managed security service vendors in these accounts.

How a company purchases or acquires technology products and services is affected by company size. The size of an SMB and the type of IT organization that they have influences and reflects the technology choices the SMB make. Typically, a small business (defined as a company with 1-99 employees) will have either no IT resources at all or one full-time IT resource.

The technology solutions and services purchase cycle typically involves 4 stages: Identify Need, Evaluate Solution, Select Solution, and Final Purchase Decision. The persons involved in each of these four stages of the process are different as is their level of involvement at each stage, which is usually dictated by the size of the small business, technology sophistication and sometimes the age of the primary decision maker (usually the owner or CEO) in these companies. Figure 1 provides details of all those involved in these technology solution and services purchase decisions at small business in North America.

Figure 1: Personnel Involved in Technology Solution Purchase Process at Small
Businesses (1-99 employees)

Source: SMB Group, 2010

• Identify Need. In more than 75 percent of the cases, the owner of the business is the person involved in identifying need for technology solutions and services support from a end-user employee or senior business manager (non IT). This is usually based on the business pain points the small business is experiencing and how the use of these technology solutions will help address them. Only 21 percent of the cases involve in-house IT personnel in identifying need for technology solutions and services.
• Evaluate Solutions. The role of line-of-business managers and end-users becomes more important in evaluating different solution alternatives, often they are involved with doing a free trial of these solution more frequently online but also sometime by downloading applications. The in-house IT person assists with the technical requirements for the evaluation and the owner is also usually involved in about 60 percent of the evaluations. Small business technology environments are straightforward but in some cases may require some advanced features; small businesses are rarely leading-edge technology adopters. In a small percentage of cases small businesses solicit the help of industry colleagues and/or external VARs and consultants in these more advanced and complex evaluations. The results of these evaluations helps small businesses reduce the number of evaluated solutions to a “short list” driven by predefined criteria.
• Select Solutions. This step is completed by the owner/CEO and the In-house IT person based on the evaluation of various solutions. The factors involved in the selection process are price, ease-of-use, higher quality and stronger brand. As companies grow, the focus shifts from price and ease-of-use to quality and stronger brand as reviews from analysts and social media become more important.
• Final Purchase Decision. In almost all small businesses, the owner or CEO of the business makes the final purchase decision, with the line of business executive or the in-house IT executive contributing in a limited role.

The insights included in the blog are from a comprehensive SMB study on “SMB Routes to Market for Technology Solutions“. The SMB Group’s 2010 Routes to SMB Market Study helps Technology software solutions vendors and services providers identify routes (channels) to the SMB market for their products and services based on how they go about making purchase decisions. Study results and analysis will help them make well-informed marketing, product development, media and channel decisions to successfully reach, influence and market to North American SMBs with one to 1000 employees.

Another finding that I find quite fascinating is how frustrated and confused many SMBs are about technology solutions. Survey respondents indicated that their top two technology challenges are figuring out how different types of solutions can help their businesses, and getting better insights out of the data they already have:

• Top technology challenges for small businesses:
  1. Get better business insights from existing data: 35%
  2. Figuring out how different solutions can help the business: 32%
  3. Implementing new solutions/upgrades: 32%
  4. Integrating social media with Web site, marketing tools, etc.: 24%

• Top technology challenges for medium businesses:
  1. Get better insights from existing data: 33%
  2. Figuring out how different solutions can help the business: 32%
  3. Integrating social media with Web site, marketing tools, etc.: 32%
  4. Implementing new solutions/upgrades: 30%

As you can see from the above data points, SMBs view figuring out what solution can best help the business and getting better insights from existing data as bigger challenges than implementing a new solution! Scarily, these challenges are just as significant in medium businesses as in small ones, despite the fact that most medium businesses have IT staff, larger IT budgets and better access to external technology advisors.

Clearly (no pun intended) this confusion and frustration creates a huge, and in my view, a vastly under-rated (by most vendors, anyway) inhibitor to SMB technology adoption. It reinforces my belief that any company trying to sell into the SMB market needs to do some serious self-evaluation,  as I discussed in my post earlier this year, Does Your SMB Marketing Message Need a Makeover? Seven Questions to Ask.

SMB requirements for clarity, transparency and a demonstrable value proposition will become even more intense as more SMBs starting shifting from generic search engines to application marketplaces/app stores and social media to learn about, evaluate and buy solutions. These newer channels provide more and better context for SMB customers, and provide a source of unbiased insight about other customers’ actual experiences with solutions.

While our study shows that search engines are the top information source for SMBs today, social networking site such as LinkedIn, Twitter and Facebook are gaining momentum at a rapid rate. And, although SMB app stores are an even more recent phenomenon, our findings indicate that a majority of  SMBs are aware of and using/planning to use them. Among small businesses, 23% use them and 29% plan to use app stores; while among medium businesses, 44% use app stores and 24% plan to use them.

With so many products and solutions competing for SMB mind and wallet share, and new information sources and channels that are making it easier for SMBs to sort through the clutter, vendors need to redouble their efforts to clearly describe their solutions, provide solid evidence of how it can help businesses achieve their goals, and clarify how it differs from competitive offerings. Otherwise, the market–with the help of social media and app stores–will do it for them.

Anyone that’s ever unwittingly downloaded malware from the Internet knows that it can bring your PC to a virtual stand still. This horrible stuff can infect your computer by exploiting vulnerabilities in your browser, or by opening and taking advantage of security holes in a PC application. Even if you think you are confining your surfing to secure sites, these evil-doers can get in to your PC via banner ads on those sites. Getting rid of this malware can require hours of times and sometimes expensive support calls–and can make you tear your hair out.

Announcement Highlights

Which brings me to the Dell KACE announcement last week. Dell KACE is offering Secure Browser as a free download to help Firefox users proactively decrease the risk of installing malicious software via the Firefox browser. The Secure Browser does this by creating a virtual instance of the Firefox browser application, which isolates any activities run in the browser from the user’s computer and operating system. The tool also gives users the ability to clear any changes made with the browser with a single click.

Is There Something Valuable in this Free Offer for Me?

If you’ve ever been hit by on of these insidious malware attacks, or watched someone else suffer through one, you’ll immediately recognize the relevance of this offering. As more of the computing we do shifts from PCs to the Web, Secure Browser can give Firefox users another hedge against the headaches and lost productivity that come with these types of attacks.

Of course, this is of value to you today on the one in three chance that you use Firefox as your browser. Firefox is currently the number 2 browser, with about 1/3 market share. Secure Browser doesn’t run on the number one browser, Internet Explorer (IE) or on Opera, Chrome or Safari–although Dell says it is considering introducing a Secure Browser for IE in the future.

Why is Dell Offering Secure Browser for Free?

Dell acquired KACE, which designs and builds systems management and deployment appliances, in February of this year. Dell KACE aims to serve a very wide swath of organizations–from 100 to 10,000 employees–which it loosely labels “medium business” by helping them to more easily attend to the chores associated with deploying applications and managing their IT environment.

KACE solutions are available both as physical appliances (delivered as a pre-packaged hardware and software appliance) and as software-only virtual appliances, which customers can buy and load onto servers they already own.

By providing users with a snippet of valuable functionality via the Secure Browser, Dell hopes to create awareness and spark interest in its KACE appliances. When the free Secure Browser is used in conjunction with the KACE 1000 Management appliance, IT administrators can centrally deploy and manage it.

Quick Take

With this announcement, Dell has already achieved one of its goals–generating some good media coverage with its Secure Browser announcement. However, Dell will need to supplement this initial spurt of energy with ongoing education to get more people to try it. After all, most people don’t worry about the fallout from this type of breach until they experience it.

On the tactical level, Dell needs to get IE support out the door as soon as possible expand the potential market footprint and impact of Secure Browser as a lure for KACE. Strategically, Dell also needs to effectively monitor and segment users of the free Secure Browser solution. With such a broad target market for KACE (organizations with 100 to 10,000 employees) Dell must effectively differentiate between these different segments, both in terms of their existing IT management environments and requirements, to make the most out of its free offer.

Briefing Highlights:

Which brings me to the Dell KACE announcement last week. Dell KACE is offering Secure Browser as a free download to help Firefox users proactively decrease the risk of installing malicious software via the Firefox browser. The Secure Browser does this by creating a virtual instance of the Firefox browser application, which isolates any activities run in the browser from the user’s computer and operating system. The tool also gives users the ability to clear any changes made with the browser with a single click.

Is There Something Valuable in this Free Offer for Me?

If you’ve ever been hit by on of these insidious malware attacks, or watched someone else suffer through one, you’ll immediately recognize the relevance of this offering. As more of the computing we do shifts from PCs to the Web, Secure Browser can give Firefox users another hedge against the headaches and lost productivity that come with these types of attacks.

 Of course, this is of value to you today on the one in three chance that you use Firefox as your browser. Firefox is currently the number 2 browser, with about 1/3 market share. Secure Browser doesn’t run on the number one browser, Internet Explorer (IE) or on Opera, Chrome or Safari–although Dell says it is considering introducing a Secure Browser for IE in the future.

Why is Dell Offering Secure Browser for Free?

Dell acquired KACE, which designs and builds systems management and deployment appliances, in February of this year. Dell KACE aims to serve a very wide swath of organizations–from 100 to 10,000 employees–which it loosely labels “medium business” by helping them to more easily attend to the chores associated with deploying applications and managing their IT environment.

KACE solutions are available both as physical appliances (delivered as a pre-packaged hardware and software appliance) and as software-only virtual appliances, which customers can buy and load onto servers they already own.

By providing users with a snippet of valuable functionality via the Secure Browser, Dell hopes to create awareness and spark interest in its KACE appliances. When the free Secure Browser is integrated with the KACE 1000 Management appliance, IT administrators can centrally deploy and manage it.

Quick Take

With this announcement, Dell has already achieved one of its goals–generating some good media coverage with its Secure Browser announcement. However, Dell will need to supplement this initial spurt of energy with ongoing education to get more people to try it. After all, most people don’t worry about the fallout from this type of breach until they experience it.

On the tactical level, Dell needs to get IE support out the door as soon as possible expand the potential market footprint and impact of Secure Browser as a lure for KACE. Strategically, Dell also needs to effectively monitor and segment users of the free Secure Browser solution. With such a broad target market for KACE (organizations with 100 to 10,000 employees) Dell must effectively differentiate between these different segments, both in terms of their existing IT management environments and requirements, to make the most out of its free offer.

What is an Online Collaboration Suite?

An online collaboration suite provides businesses with an integrated set of tools that span a range of collaboration needs. While not every collaboration suite includes the same capabilities, they often feature tools such as business email, instant messaging, contact management, calendars, file sharing, document management, project management, portals, workspaces, web conferencing, and social media tools such as forums, and wikis.

Online collaboration suites are delivered as web-based, Internet delivered services, so you don’t need to buy, install or configure any hardware or software, or hire IT staff or consultants to get up and running. Users simply login via a Web browser to buy and use the service, which are typically sold through a monthly or annual per user subscription pricing model, with certain amount of email storage included as part of the standard subscription price. As with many online services, most online collaboration suite vendors offer free trials so you can try before you buy.

Why Should You Care?

Collaboration is probably the only activity that everyone in every company engages in everyday. Whether you’re the CEO or a new hire, an accountant or a construction worker, you need to share and manage information, ideas, resources and connections to get your job done. Effective collaboration tools help you to share knowledge, streamline processes, and keep everyone in the organization “on the same page”.

Until recently, most small businesses could get along just fine with a few tools, such as email, calendars, document sharing and the good old telephone. But in the last few years, the growth of digital information has been exponential. Newer collaboration tools, including portals, Web conferencing, instant messaging, social networks, wikis, bookmarks and tagging have become more prevalent as people seek out better ways to organize, share and access this information avalanche.  At the same time, the kinds of devices we use to collaborate–from desktops to notebooks to smart phones to iPads–has exploded.

New and better ways to collaborate can help make your business more efficient and productive. But, it can be very difficult to piece together different tools and services into an integrated whole. Online collaboration suites integrate many pieces of the collaboration puzzle into a unified solution that makes it easier to find, share, manage and use information, and to locate and connect with the people you need when you need them.

What to Consider

Is your business is suffering from collaboration chaos? Common warning signs include:

• Too much telephone tag–wasted time on missed phone calls, searching for missing phone numbers and locating people with the know-how you need.
• Bottlenecks in finding information or resources needed to get a job done.
• Email overload and version control issues–such as trying to figure out which document is the most recent one.
• Mistakes made because people are using incorrect or outdated information.
• An overload of customer service calls.
• Inability to easily track, monitor and engage in social media conversations relevant to your business.
• It takes too long to make decisions because people can’t access and/or agree on what the “right” information is.

While many vendors offer online collaboration suites to help pull together people, tools, services and content to help bring order to the digital chaos, the devil is in the details. The SMB Group is currently conducting research and interviews to provide an in-depth comparison of eight vendors’ online collaboration suites (including Google Apps for Business, HyperOffice, IBM LotusLive Engage, Microsoft Business and Office Productivity Suite (BPOS), OnePlace, Salesforce.com, VMWare Zimbra and Zoho Business). Each vendor has bundled a different a different mix of capabilities into its suite.

For instance, several vendors include email, project management and/or web conferencing as part of the suite, but others don’t. Some focus heavily on social capabilities, while others have just started to add this type of functionality. Standard storage for email ranges from 5GB to 25GB, and each vendor offers different standard service and support capabilities and service level agreements. Some focus exclusively on the small and medium business (SMBs), while others target large enterprises as well as SMBs. Some offer freemium models, others don’t. Of course, pricing varies, as does the minimum contract length–from one month to one year. Some vendors offer pieces of their suite, such as instant messaging or Web conferencing, ala carte, and let you add new solutions as you need them in an integrated fashion. Some vendors sell direct, some through channel partners, and some do both.  And each offering has its own look and feel.

While each of these solutions has its pros and cons, some will be a better fit for your business than others, so it’s critical to take a step back and consider your business needs, priorities and goals before you start evaluating specific solutions. Your assessment doesn’t need to be complicated–it can be as simple as thinking about what’s working well for you now, and identifying collaboration roadblocks and gaps that hamper productivity and business results. Then look for an online collaboration suite that can help you to address these immediate needs quickly and easily, but also give you the option to use more of the suite’s functionality as your needs require and time permits.

Clearly, Intuit is not alone, and cloud vendors across the board will need to redouble their efforts to harden, backup, continuity and disaster recovery services.  Customers will also demand more transparent, accessible visibility into ongoing performance, downtime and problem resolution, and compensation when downtime exceeds guarantees in vendor service level agreements. And, as stated so well in a Hubspot blog, cloud vendors must put a a proactive social media strategy in place to lessen the fallout when a problem does occur.

That said, I don’t think that customers should leap to the conclusion that the sky–or the cloud–is falling. Smaller companies, in particular, are likely to have much more trouble keeping their systems up, running and productive than a cloud provider.

However, it does seem to me that now is good time for vendors and customers to consider a hybrid appliance-cloud approach–which has had a difficulty getting air time amidst the cloud hype and exuberance. As I discussed in What is a Business Applications Appliance and Why Should You Care?, business application appliances come pre-configured with all of the hardware and software components required to run a specific business application, such as accounting or CRM packaged together in one box. The appliance vendor pre-integrates the hardware, databases, security, storage, virtualization and other technologies with the business application to provide a complete solution.

This means that users can set up an appliance in a matter of minutes, instead of the hours or days it would normally take to source, install, integrate and tune all of these component parts on a general purpose server. And the appliance vendor (or a business partner) can deliver remote system management, monitoring, updates, patches, support and backup over the Internet, and deliver additional Web-based services, and/or download new applications as needed.

As a result, the appliance approach can bridge the gap between traditional, customer-premise deployments and cloud computing or software-as-a-service (SaaS) model, integrating on-premise, integrated appliance systems with cloud services. In many respects, this model could offer the best of both worlds to companies that want something easy to use and maintain, but are still uncomfortable with complete reliance on the cloud.

Let me know what you think–will recent cloud vendor outages shed new light on the appliance model?

Highlights:

In May of this year, IBM acquired Cast Iron Systems (for an undisclosed sum) to help customers more effectively tackle the challenges of integrating cloud and on-premise solutions. Cast Iron, which was founded in 2001 and has 75 employees, provides hundreds of pre-built templates and a “configuration, not coding” approach to help streamline and shorten the time application integration. Cast Iron’s OmniConnect portfolio includes three deployment options, which all share the same interface, and deliver user interface mashups, process integration and data migration capabilities:

• Cast Iron Cloud2, a multi-tenant Integration-as-a-Service cloud offering
• Cast Iron Physical Appliance
• Cast Iron Virtual Appliance

Cast Iron has positioned itself as the “The #1 SaaS and Cloud Integration Company,” with more than 450 mid-market customers and an unspecified number of large enterprise accounts. Traditionally, Cast Iron has competed against rivals such as Boomi, Informatica and Pervasive in the integration market.

IBM will make Cast Iron’s solutions available worldwide as part of the WebSphere integration portfolio.

Quick Take:
IBM’s acquisition of Cast Iron was driven by a few fundamental market trends. First, cloud computing growth is exploding. IBM is forecasting global market CAGR for cloud computing is expanding by 28%, from $47BB in 2008 to $126B in 2012. In addition, data volumes are rising exponentially. IDC forecasts that data stores are growing an average of 60% annually, fueled by factors including the social media explosion, and the increasing trend to aggregate, mine and monetize data. More and more of this data will be stored in the cloud.

These forces ratchet up the need for simpler, cheaper integration alternatives. In the cloud, data and data control are widely distributed. And most companies will continue to operate in a blended or hybrid computing approach for the foreseeable future. Connectivity scenarios between cloud applications and data sources, cloud to on-premise, and between public and provide clouds are spiraling the number of possible integration scenarios. Developers, integrators and customers must deal with a staggering number APIs and technologies to accomplish these integrations.

While IBM’s WebSphere already includes a wealth of integration capabilities, Cast Iron enables IBM to provide more turnkey integration, which reduces cost and complexity, and removes significant barriers to cloud computing adoption. By leveraging this streamlined approach, IBM can strengthen its role as a integration hub for its existing enterprise customers, and more readily extend its integration footprint into the mid-market.

Of course, IBM had other acquisition options, most notably Pervasive, which is a significantly bigger company than Cast Iron, boasting more than 1,000 SaaS integration customers and dozens of integrations; and Boomi, which focuses exclusively on a cloud-based integration platform, and offers dozens of integrations. (Interestingly, Boomi, Cast Iron and Pervasive–all provide integrations for several of the leading SaaS vendors.)

So why Cast Iron? My take is that IBM took this route for a couple of reasons. First, I think IBM likes the fact that Cast Iron’s line-up features software, cloud and appliance options. IBM has been putting a lot of focus on appliances, in particular, as bridge between on-premise and cloud solutions. Cast Iron provides an appliance option, and also provides integration in a uniform way across all three delivery models. In addition, IBM likely viewed Pervasive’s PSQL database business, which still accounts for a majority of Pervasive’s revenues, as an asset it didn’t want or need.

For these and other reasons, the Cast Iron acquisition makes sense for IBM. But will IBM be able to successfully surface and leverage Cast Iron’s automated, simplified approach within the context of an increasingly complex and crowded WebSphere and Software Group portfolio–which, I’m told, is now comprised of more than 30,000 different offerings? IBM already has two disparate integration stacks, WebSphere for application integration, and InfoSphere for data integration. Smaller acquisitions have tended to get lost in the IBM shuffle in the past, and IBM Software has made additional, bigger acquisitions (such as Sterling Commerce and Coremetrics) since it acquired Cast Iron.

Meanwhile, what moves will Pervasive, Boomi and Informatica make to meet the challenges of a new integration gorilla in the mist? As important, what plays will IBM’s traditional competitors, such as Oracle and SAP, as well as cloud leaders such as Google, Amazon, Salesforce, etc. come up with as they pursue similar goals? Are other integration acquisitions in the works?

I don’t have a crystal ball–or inside information–to know how the details of new developments will unfold. But as the drivers for more streamlined cloud integration continue to intensify, this promises to be a very interesting space and one I’ll be watching closely.